With a growing number of new competitors entering the financial services space combined with a bevy of new regulations and their subsequent compliance costs, credit unions are discovering that traditional membership growth strategies may not be enough for long-term sustainability.
New approaches may include taking a harder look at which segments of the population carry the most influence when it comes to loans and other products and services. Here are four strategies credit unions might consider to grow their fields of membership.
Credit unions are vastly known for loan products but other lesser known offerings such as retail investments and insurance often don’t register on the radar. To compete, boards and senior management should take a hard look at the lineups to see where innovation can come into play. For instance, the demand for mobile banking platforms has shown few signs that it’s slowing down. According to Fiserv’s Seventh Annual Billing Household Survey, mobile bill payments surged from eight million in 2012 to 27 million in 2014.
As of January, 60 credit unions and banks have gone live with Apple Pay, a mobile payment and digital wallet service launched by Apple Inc. late last year that allows users to conduct payment transactions using a number of the company’s products.
While penetration is small, online lending continues to be an area to watch especially as more consumers are opting for fast decisions and approvals versus visiting branches to submit loan applications. To accommodate that shift, online lenders have developed new credit models that are linked to popular social media platforms including Facebook and LinkedIn. The ability to comparison shop online can give credit unions the edge they need to stand out from the competition.
The average age of a credit union member hovers around the 48-year old mark. The downside of that threshold is as members approach retirement years, the gap widens on recapturing opportunities to create long-term relationships. Enter millennials, the influential slice of the population pie born between 1980 and the early 2000s, and according to some research, are diverse, digitally astute and carry a lot of debt.
Traditional outreach methods won’t likely work with Generation Y. Because of their heavy reliance on technology, credit unions will have to meet them where they live and breathe: mobile and online. Using social media platforms such as Twitter and Facebook will need to be more than the occasional tweet and post. A strategic plan must outline how to incorporate levels of courtship that hinge on all things digital.
Millennials are always on the prowl for the best deals. Credit unions might consider lowering their rates on products such as certificates of deposit and vehicle loans. Prepaid cards are the go-to choice for many millennials. Add a rewards program and a credit union is on its way to creating a potential long-term and loyal relationship.
Rethink Traditional Marketing
Long gone are the days when ads in newspapers and direct mail pieces were enough to woo potential members. According to a list of top trends for 2015 from CUNA, marketing using big data ranked among the highest priorities. By taking a thorough look at members’ habits including demographics, how much they tend to spend, where they purchase items and how likely they are to save for big-ticket items, credit unions can tailor their products and services and essentially grow their membership base.
Building a brand takes a sincere commitment from everyone, starting with front-line staff. Effective marketing means bumping up training for specific departments rather than relying on a general session that often fails to communicate how staff should sell a credit union’s brand from various perspectives.
According to NCUA data, 262 mergers occurred in 2014 with most of the consolidations taking down credit unions under $50 million in assets. The good news is while the number of credit unions remains on the decline, membership numbers passed the 100 million mark last year.
Industry analysts credit the growth with a continued rise in used and new auto sales, improved employment figures, more consumer demand for credit and credit unions getting more aggressive with loan pricing as they compete with banks.
Expanding existing and internal relationships goes back to what drew members to the credit union in the first place: low rates, better service, and being an alternative to traditional competitors. However, the next level of organic growth should include strategic plans to stay current and innovative.
Collaboration with other credit unions has also helped smaller ones stay in the game by having the ability to offer products and services that members would not otherwise have access to. If a merger is an option to grow organically, credit unions should be careful not to dilute their service levels or long-time members may go elsewhere. Merging with a credit union in an area where the new member pool is seeking an alternative to banks should also be considered.